FCC Suspends Deregulation of Special Access Telecom Markets

August 23, 2012

The Federal Communications Commission issued an order Wednesday night that suspends the rules under which telecommunications companies can request the deregulation of special access markets, on a 3-2 vote that followed party lines.

Special access refers to the high speed broadband connections that link commercial users like office buildings to main telecommunications lines. Dominant providers typically lease access to rivals who want to provide special access service without shouldering the costs of duplicating broadband infrastructure. The FCC estimates that the market for special access services is between $12 billion and $18 billion a year.

The long-running policy battle over this obscure but lucrative and ubiquitous telecommunications service is complicated in its details, but in broad strokes, it pits the interests of dominant, legacy providers and their Republican allies against a group of smaller telecommunications services, backed by Democrats in Congress, that want regulatory relief from what they see as predatory pricing.

The prices that dominant carriers could charge were capped under old rules, but a 1999 change provided a path for the deregulation of special access markets under certain conditions. However, the criteria adopted by the FCC to determine whether a special access market was competitive became the subject of an ongoing dispute between smaller providers, called competitive local exchange carriers or CLECs in the language of the industry, and the incumbent local exchange carriers or ILECs.

The FCC plans to put out a call for information from participants in special access markets in order to redraw the set of conditions under which these markets can be deregulated. This order is expected to come in 60 days and will be mandatory. Previous requests for data from market participants were not mandatory, and dominant providers held that their competitors were withholding information from regulators in order to secure favorable pricing.